3 rd Quarter Fiscal 2019 Results Conference Call November 20, 2018
Forward Looking Statements, Non-GAAP Financial Measures and Other Information This presentation contains “forward-looking statements”. Other than statements of historical facts, all statements contained in this presentation, including statements regarding the Company’s future financial position, future revenue, prospects, plans and objectives of management, are forward-looking statements. Words such as “outlook,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “should,” “could,” “project,” and similar expressions, as well as statements in future tense, identify forward-looking statements. You should not consider forward-looking statements as a guarantee of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief at that time with respect to future events. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors, assumptions, uncertainties, and risks that could cause such differences are discussed in the Company’s Transition Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2018 and other filings with the SEC. The forward-looking statements in this presentation are expressly qualified in their entirety by this cautionary statement. The Company undertakes no obligation to update these forward-looking statements to reflect new information, or events or circumstances arising after such date. This presentation includes certain “Non-GAAP” financial measures as defined by Regulation G of the SEC. As required by the SEC, a reconciliation of those measures to the most directly comparable GAAP measures is provided on the Regulation G slides included as slides 13 through 21 of this presentation. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company’s reported GAAP results. 2
Participants Steven E. Nielsen President & Chief Executive Officer Timothy R. Estes Chief Operating Officer H. Andrew DeFerrari Chief Financial Officer Richard B. Vilsoet Chief Legal Officer Agenda Introduction and Q3-19 Overview Industry Update Financial & Operational Highlights Outlook Conclusion Q&A 3 3 3
Q3-19 Overview and Highlights Strong organic revenue growth of 12.9% Contract revenues of $848.2 million for the quarter ended October 27, 2018, compared to $756.2 million for the quarter ended October 28, 2017 Contract revenues of $8.8 million from a previously acquired business and $3.9 million from storm restoration services Solid operating performance Non-GAAP Adjusted EBITDA of $98.6 million, or 11.6% of contract revenues, for the quarter ended October 27, 2018, compared to $97.6 million, or 12.9% of contract revenues, for the quarter ended October 28, 2017 Non-GAAP Adjusted Diluted EPS of $0.98 per share for the quarter ended October 27, 2018, compared to $0.99 per share for the quarter ended October 28, 2017 Ample liquidity Liquidity of $350.1 million at Q3-19 consisting of $328.5 million of availability under Senior Credit Facility and cash of $21.5 million Senior Credit Facility amended and restated during October 2018, increasing revolver capacity to $750.0 million and the term loan to $450.0 million and extending maturity to October 2023 No outstanding revolver borrowings at the end of Q3-19 4 See “Regulation G Disclosure” slides 13-21 for a reconciliation of GAAP to Non-GAAP financial measures.
Industry Update Industry increasing network bandwidth dramatically Major industry participants deploying significant 1 gigabit wireline networks Emerging wireless technologies are driving significant wireline deployments Wireline deployments necessary to facilitate expected decades long deployment of fully converged wireless/wireline networks that will enable high bandwidth low latency applications Industry effort required to deploy these converged networks continues to meaningfully broaden our set of opportunities. Total industry opportunities in aggregate, are robust. Delivering valuable service to customers Currently providing services for 1 gigabit full deployments across the country in dozens of metropolitan areas to a number of customers Have secured and are actively working on a number of converged wireless/wireline multi-use networks Customers are revealing with more specificity multi-year initiatives that are being implemented and managed on a market by market basis Our ability to provide integrated planning, engineering and design, procurement and construction and maintenance services provides value to several industry participants As with prior large scale network deployments, normal timing and customer spending modulations expected as network deployment strategies and technologies evolve. Tactical considerations may also impact timing. Dycom’s scale, market position and financial strength position it well as opportunities 5 continue to expand
Revenue Highlights Organic % adjusted for revenues from acquired businesses and storm restoration services, when applicable. Non-GAAP Organic Growth (Decline) % Q3-19 organic growth of 12.9% 30% Top 5 customers increased 18.3% 22.9% 25% organically 20% 14.9% 12.9% 15% All other customers decreased 2.9% 10% 4.6% 5% 0.8% organically 0% (8.4)% -5% (10.0)% (10.6)% -10% -15% (a) (a) Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q1-19 Q2-19 Q3-19 (a) Due to the change in the Company’s fiscal year end, the Company’s fiscal 2018 six month transition period consisted of Q1-18 and Q2-18. Top 5 customers represented 78.4% and 75.3% of revenues in quarters ended October 27, 2018 and October 28, 2017, respectively Organic growth with Comcast at 8.7%, Verizon at 115.9%, and AT&T at 14.9% 6 See “Regulation G Disclosure” slides 13-21 for a reconciliation of GAAP to Non-GAAP financial measures.
Backlog and Awards Financial charts - $ in millions (a) (a) (a) (a) (a) Due to the change in the Company’s fiscal year end, the Company’s fiscal 2018 six month transition period consisted of Q1-18 and Q2-18. Selected Current Awards and Extensions Approximate Customers Description Area Term (in years) Verizon Construction Services Various 3-4 CenturyLink Construction Services California, Utah, Colorado 1 TDS Telecom Construction Services Tennessee 3 Various Locating Services California, New Jersey, Tennessee, South Carolina 1-3 Rural Broadband Services Texas, Wisconsin, Indiana, Kentucky, Alabama 1-3 Note: Our backlog represents an estimate of services to be performed pursuant to master service agreements and other contractual agreements over the terms of those contracts. These estimates are based on contract terms and evaluations regarding the timing of the services to be provided. In the case of master service agreements, backlog is estimated based on the work performed in the preceding twelve month period, when available. When estimating backlog for newly initiated master service agreements and other long and short-term contracts, we also consider the anticipated scope of the contract and information received from the customer in the procurement process. A significant majority of our backlog comprises services under master service agreements and other long-term contracts. Backlog is not a measure defined by United States generally accepted accounting principles; however, it is a common measurement used in 7 our industry. Our methodology for determining backlog may not be comparable to the methodologies used by others.
Financial Highlights Financial charts - $ in millions, except earnings per share amounts As a % of Contract Revenues 12.9% 11.6% Revenues of $848.2 million in Q3-19 increased organically 12.9% from the comparable prior period Strong growth by several large customers Storm restoration services contributed $3.9 million of revenues during Q3-19, compared to $15.9 million in the comparable prior period Previously acquired business contributed $8.8 million of revenues during Q3-19 Non-GAAP Adjusted EBITDA of $98.6 million, 11.6% of revenues in Q3-19 Non-GAAP Adjusted Diluted EPS of $0.98 in Q3-19 8 See “Regulation G Disclosure” slides 13-21 for a reconciliation of GAAP to Non-GAAP financial measures
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